Competitive Advantages in the Video Streaming Industry : Does the release of original content have an impact on platform competition and subscriber base?

Abstract

The television industry and the way we consume video entertainment has changed massively over the past decades. Innovations and the technological development have facilitated the establishment of new business models within the entertainment industry. We have seen the emergence of the subscriber video on demand (SVOD) sector, which is growing to replace linear television, and with new players entering the market seemingly every year. As the competition within the industry intensifies and the market is moving towards its maturity level, it is becoming increasingly more important for the actors to find ways to make their platform attractive to the consumers. Thus, it is important to obtain competitive advantages. In this thesis we aim to explore the impact the release of new original content has on subscriber base for the SVOD platforms. Original content, being produced by and thus exclusive to a platform, is often pointed to as a key activity for making the platform attractive to new and existing subscribers. To conduct our research we will develop a comprehensive analysis of the SVOD industry. We will also utilize two different regression methods to analyse a potential relationship between our variables of interest, using data on some of the biggest platforms on a global scale. While the release of new originals will serve as our main independent variable, we will also account for time trends, content quality and price increases. Through our regressions we find weak support for a positive correlation between the release of new original content and subscriber growth. The quality of the new content does also appear to have an impact. We do however acknowledge that there are several other factors that might affect the development in subscription numbers, in particular the aggregated industry trends, making us unable to credit this growth to the release of original content without taking more aspects into consideration. As an extension of our analysis, we also discuss the impact of original content in a bigger perspective. Here we conclude that there are competitive advantages to be obtained by the platforms from having original content as a part of their growth strategy, that go beyond subscription numbers as an isolated success metric.